Posted by Leave a Commenton Wednesday, April 27, 2016 |
Do You Even Economics, Madeleine Doubek?
I’m going to state this right off the bat: I had to read this column from Madeleine Doubek three times before I think I fully understood the point she was trying to make. From a simple clarity of writing perspective, that certainly isn’t good.
But beyond that, I find the whole thing just strange.
Republican Gov. Bruce Rauner is about as pro-business as Republicans come, right?
He’s got to be one of those free-market libertarian types, right?
Ok, let’s stop here for a minute. We’re already off to a bad start, Madeleine. Being pro-free markets is not at all the same thing as being pro-business. Someone who is pro-business could be completely fine with massive government subsidies for a specific company. After all, if they’re pro-business then all they really care about is what is good for business, right? Everyone else be damned. No one who is pro-free market would support a subsidy like that.
So, starting off by casually confusing these two terms doesn’t really bode well for the next several hundred words.
Would you be surprised to learn his health care department is considering giving a multi-million-dollar contract to one company to provide products thousands of Illinoisans need?
Ummmm… no? Especially not for a governor who has prioritized saving this state money, which changing procurement practices to take advantage of economies of scale could certainly accomplish.
Now that we have that settled, does that mean we’re done with this column? No? There’s more? Darn it…
This is a little story about the nitty-gritty dealings of government that affect real people and the real people who run businesses.
Fun fact: those were my favorite bedtime stories as a kid.
Matt Peterson is the president of Home Products Healthcare, which provides incontinence products for adults and children on Medicaid. He’s also part of an association of businesses that provides home health products throughout the Midwest.
He called recently because he’s concerned about a contract the state might grant for incontinence products. Plenty of people have bladder control issues at one time or another in their lives due to medical conditions, medication or disabilities. People who are on Medicaid deserve good products and a good choice of accessible products, too.
Oh, really? A decidedly self-interested party contacted a columnist because he’s upset about a potential government decision that could have a negative impact on the business his organization’s members currently does with the government? There’s a shocker.
Administrators in Rauner’s Department of Healthcare and Family Services have issued a request for proposals, or RFP, for companies that would be capable of being the sole provider of incontinence products to state Medicaid recipients.
Translated, that means the Rauner administration could pick a winner and create scores of losers among companies that sell incontinence products. It could create a monopoly for bladder control products among Illinois Medicaid recipients.
This is just asinine.
For one, this is how government procurement works. Or, at least, should work. They’re requesting multiple potential providers to submit their best prices to meet the state’s need. Ho-hum. Happens all the time. This is suddenly a scandal because a member of a business group that could potentially lose out on state revenue depending on the decision that’s made called a columnist? Come on.
We do similar things all the time when we shop around for best prices. There’s a reason that people who need to buy a lot of something do it at Costco. Buying in volume from a single provider allows the purchaser to save money while the seller still profits. For a state that is in as big a financial hole as Illinois, this just makes sense. We don’t run around town, buying a smaller amount of the same item from multiple different stores so that we don’t “create scores of losers” out there.
There’s also no reason to believe this is going to create a monopoly in any meaningful sense of the word. We haven’t been given a reason to expect that any of the other providers are going to go out of business if they lose out on their piece of Illinois’ business. In fact, if it’s actually true that any of these businesses would fail *only* because they lost out on the Illinois Medicaid contract, they probably should fail! If their customer base is that thin, they’re clearly not offering much in the way of value to consumers.
Why? To save money and boost quality control, said John Hoffman, spokesman for the Illinois Department of Healthcare and Family Services.
Those sound like pretty good reasons to me.
Peterson said when he and others learned about the move toward considering a sole provider of the products, they met with department Director Felicia Norwood and others, who explained they wanted to save $5 million a year from what the state has been paying. Understanding the state’s debt and budget crisis, Peterson said he and others in the industry got together, crunched numbers and told department chiefs they believed they could work together to cut prices by closer to $5.4 million year.
Why they weren’t doing that all along is another great question, but Peterson said state bureaucrats believe they have a quality issue that causes some people to cycle through more diapers, pads and other products each month than is considered reasonable.
Let me get this straight. We’re supposed to feel sorry for this association of businesses because they might lose out on their state contract when they’re admitting they were capable of charging Illinois taxpayers $5.4 million per year less than what they were? Yeah, boo hoo.
Also, “why they weren’t doing that all along” really is a great question, Madeleine. Did you think to ask Peterson that? Apparently not, because the answer is nowhere to be found.
Once the department heard about providers’ ability to tighten up pricing and quantities, Peterson said they thought they had a deal, but some time in the last few weeks, the department decided not to pull the RFP. Late last week, Peterson and others requested any documents related to the RFP and were given a copy of a letter from Binson’s Hospital Supplies, Inc. that argues for a sole-source provider, makes clear it intends to submit a bid and includes a spreadsheet listing what it bid and won for the business in Indiana as the sole provider.
Binson’s Executive Vice President and COO Ken Fasse did not return a call for comment, but Peterson said he believes Binson’s letter taints the process. I’d say it taints the process further.
Assuming that Binson’s isn’t legally prohibited from providing this information to the state — and assuming that the Indiana numbers would also be available to the public, which I imagine they should be, either readily or through FOIA — I fail to see how providing the state of Illinois with more, helpful information “taints” the process.
“It’s almost like they’re saying here’s what we’ll bid. They are putting out rates they’ve been awarded in another state, which could give them an unfair advantage,” Peterson said. “It tells others, ‘I can’t bid. Look at those numbers,’ or ‘I’ve got to come in lower.’”
How exactly is this a bad thing? The idea of an RFP is to facilitate the state selecting the lowest responsible bidder. If anything, this is helpful to other bidders because now they’re not flying blind. They know what they need to do to be able to complete. If they can’t, so be it. If they can, that’s great.
How this is apparently a nefarious scandal in the mind of Doubek is baffling.
With 30,000 people a month needing the products, Peterson said he worries whether people will get the quality, choice and convenience they need with one provider. The state has more than 400 product providers now, he said.
How do you know if one provider is “living up to standard if you’ve decimated the industry and you have nothing to compare it to?”
Again, this is just asinine. We’d have nothing to compare it to? How about the track record of association of businesses currently providing these products, which has already, in essence, admitted they were overcharging by $5.4 million/year? And, once again, we have no reason at all to believe that this is going to cause all of these businesses to shutter instantaneously. If a hypothetical contract with Binson’s fails to provide both the quality and cost control, the state can make changes.
Peterson is just engaging in demagoguery here on behalf of his business association, and I can’t believe that Doubek is letting it go unquestioned.
Peterson wants the department to negotiate with all the providers to see if they can find a path that keeps most of them in business, preserves patient choice and quality and saves the state –and taxpayers — money.
A monopoly isn’t good in cable TV. It’s even worse in health care, he contended.
Translation: Peterson wants the department to negotiate with the providers who were overcharging because that’s what is in his interest.
In his seminal economic text, Wealth of Nations, Adam Smith wrote, ” I have never known much good done by those who affected to trade for the public good.” That’s what Peterson is doing here. He’s affecting to trade for the public good. As Milton Friedman once explained this idea, no one goes before Congress and says, “give me $1 million because I’m a good person and I deserve it.” No, they say they should get the $1 million because of all the good things they are going to do with it.
The interest of taxpayers isn’t really Peterson’s concern. His interest is keeping the money flowing to the current group of providers. I don’t necessarily fault him for that, but he should be honest about it.
If providers could agree to $5.4 million in savings, then clearly some shaking up in this area was long overdue, but is a monopoly a little too much turnaround agenda?
I don’t know what Doubek is trying to say here, and I’m not really sure she does either. Again, she misuses the idea of a monopoly and then somehow connects it to Rauner’s bigger picture “Turnaround Agenda” for the state. Because, reasons, I guess. I don’t know. I really don’t know.
Hoffman, state healthcare spokesman, said the department still could abandon the sole provider option after receiving bids.
“The department initiated this process to achieve costs savings and better quality control, which are especially crucial to taxpayers in this budget climate,” he said. “The process is ongoing, and HFS continues to pursue all available options to find the best way to achieve these goals.”
As well they should.
This whole story really is much ado about nothing. And the people who we really should have sympathy for here aren’t 400 some suppliers of products that apparently can be more frugally acquired from a single vendor. It’s for the taxpayers in this state that continue to have to shell out more and more of their hard earned money to countenance the state’s gross inefficiency.
Last week, AFSCME Council 31 released a short online video taking some swings at the Illinois Policy Institute:
All in all, this is pretty ho-hum stuff, and just about what you’d expect rhetorically from AFSCME. Up to and especially including the obligatory, “Ahhhh, the boogeyman!” mention of the Koch Brothers.
But let’s take a quick look at some of the liberties AFSCME took with this video.
First up, the Chicago Tribune column from Diana Sroka Rickert. Rickert is VP of Communications at IPI, and regularly publishes a guest column in the Tribune. Here’s the freeze-frame from the video where they highlight the headline and the byline:
Notice the byline. Now look how it actually appears on the Tribune‘s website:
Just a name. No identifier. Here’s now the identifier shows up in a footer at the bottom of the column, emphasis mine:
Diana Sroka Rickert is a writer with the Illinois Policy Institute. The opinions in this essay are her own.
I’ve looked, and I can’t find where this article appears with the byline as displayed in the AFSCME video. I’m left to assume that the video image has been edited to add “a writer with the Illinois Policy Institute” behind Rickert’s name or to remove the second half of what appears in the footer, clarifying that “the opinions in this essay are her own.”
The second part is important. Rickert is not writing this piece in an official capacity for IPI. She’s expressing her own opinions. I would like to imagine that AFSCME would appreciate the same courtesy being extended to their members and officials when expressing their opinions in a private-citizen capacity and not as speaking on behalf of AFSCME. Otherwise, it’s fair game to attribute everything AFSCME members say to the union itself. Things like, perhaps, this.
Also left on the cutting room floor? The real, complete thrust of Rickert’s proposal:
Lay off the entire state workforce, and close the pension system. Work with the General Assembly to open a different retirement plan for newly hired government workers, modeled after the nation’s most popular retirement vehicle: the 401(k). Then offer to rehire state workers under the new retirement plan.
Guess they forgot to mention that whole “hire them all back part.” Oops.
Overall, there’s no sourcing for anything in this video. Most political campaign ads include some kind of citations where, if you’re really interested, you can go find and examine their justification for the claims being made. But AFSCME doesn’t tell you where you can find any context for what they’ve chosen to excerpt here.
For example, they’ve attributed the words “abandon pensions” to IPI CEO John Tillman. A quick Google search for John Tillman “abandon pensions” returns no results. And even if I stipulate that Tillman has said these two words consecutively at some point in time, there’s no way to access any greater context for those remarks. They’re two words. I imagine if we went back through the statements of AFSCME officials we could have some tremendous fun excerpting two-word phrases out of context from their greater statements.
Later on, the video asserts that IPI’s agenda is to “Wipe Out Unions.” Their justification for this claim is this:
Establishing local right-to-work zones = “wipe out unions?”
First of all, we’re only talking about localized right-to-work zones. In this particular case, this is about legislation that was approved in Lincolnshire that only governs that village. Simply put, there are unions within right-to-work zones. There are 26 right-to-work states in the country, including union-heavy Michigan. There are unions existing and operating within all of those states. The only difference is that there are no closed shops. No one has to join a union (or pay tribute) in order to take a job and work in those states. They can choose to. But they’re not compelled against their will.
Claiming the establishment of local right-to-work zones is tantamount to “wiping out unions” is absurd, and pretty self-indicting the part of the unions. What they’re really saying is that they believe when people are extended a choice on whether or not to join a union, people will overwhelmingly choose not to join, thus resulting in the union being “wiped out.” They’re saying that they themselves believe unions are only sustainable when people are coerced and compelled into joining and supporting them. What does that say about unions?
If this is really the best that AFSCME has to offer, then that’s pretty weak sauce.
There are plenty of people who are disenchanted with the current election cycle. But I think it’s safe to say that Reboot Illinois publisher and Chicago Sun-Times columnist Madeleine Doubek is not looking forward to this fall’s state contestso:
Why should we care about what happens in contested state legislative races all over the state this year? Each really is about the battle for control between GOP Gov. Bruce Rauner and Democratic House Speaker Michael Madigan. You knew that, but perhaps you didn’t realize we all will lose no matter who wins.
I can empathize with the general feeling. I’ve accepted that, for me, this year’s presidential election ends in tears no matter what happens. I’ve taken to describing it as the Alien vs. Predator election. Whoever wins… we lose:
Anyway, let’s get to why Doubek thinks this:
Every election cycle, there typically are a couple dozen hotly contested state legislative races, even after one political party or the other gets done rigging maps in their favor. Each party in both chambers has seats they can swipe from the other side. It’s in those races, traditionally, where most of the money is raised and spent.
This year is no different. But where it has changed, is that Republicans now are energized because of GOP Gov. Bruce Rauner. Rauner changes the political landscape in Illinois with his determination to shake up Springfield and his bottomless checking account. After years and years of failure, Republicans have their best shot in decades at winning the nuclear arms race that is funding and winning campaigns. …
Rauner shook up Springfield all right. Now, instead of one dictator, we now have two.
Rauner and Madigan control how much money goes into the key races like never before.
Tthe importance of money to political elections is generally overstated. Yes, it’s important. But it’s not everything. If you think money is everything, be sure to tell that to people like Republican Presidential nominee Jeb Bush or Illinois U.S. Senator Blair Hull. Or Bryce Benton, who challenged State Sen. Sam McCann, backed by a large amount of money, and lost by a sizable margin. They’re all examples that spending all the money in the world can’t make people vote for you if they don’t want to.
And the “dictator” line is just ridiculous hyperbole.
But this general consternation over how much money is being spent in Illinois political races, of the type being expressed here by Doubek, seems to be a recent phenomenon. And, at that, one prompted mostly by Gov. Bruce Rauner’s regular and significant investments in Republican candidates and infrastructure.
But for years, House Speaker Mike Madigan was the central bank of political contributions in the state. He controlled a fortune that was doled out to the candidates of his choice. And yet, it seems that far fewer people ever batted an eye at that hegemonic control of the campaign purse than they are at Rauner’s attempts to level the playing field for Republican candidates.
How can we constituents fight to be heard when the politicians all owe their jobs to Madigan and Rauner?
I’d say they can be heard in that there’s an alternative to Madigan’s singular control over politics in this state. At least there’s an alternative. And I think she gives far too little credit to voters, assuming they don’t know what they’re buying, or what is generally at stake in this election.
We’ll find out in a few weeks time what the voters think.
If there is one thing that Chicagoland politicians are good at, it’s finding all kinds of new and creative ways to separate you from your hard-earned money. Take, for example, Cook County Board President Toni Preckwinkle, who has the benefit of being viewed as reasonable and competent by far too many people mostly because she’s not Todd Stroger. According to Fran Spielman of the Chicago Sun-Times, she’s currently mulling a tax on soda and other sugary drinks as a desperation ploy to try to close the county’s budget gap:
County Board President Toni Preckwinkle is “looking hard” at a new tax on sugary soft drinks — anywhere from half a penny to a full penny an ounce — to close a $174.3 million budget shortfall without employee layoffs, sources said Tuesday. …
Now, Preckwinkle is returning to another controversial revenue idea she considered last year: a tax on sugary soft drinks long championed by public health advocates to curb obesity and diabetes that drives burgeoning health care costs.
Anything to avoid admitting the need for structural reform, I guess.
Back when the state was considering a similar tax, I wrote about why taxing soda — and other so-called vice taxes — are inherently contradictory in rationale and just generally terrible public policy:
First, the notion that obesity is an epidemic is commonplace but also grossly overstated. And the idea that people aren’t aware of what the First Lady of the United States has spent the last 5-plus years working to combat is absurd.
But the bigger insult to logic and reason is the 2nd paragraph in the quoted text above. We hear this same kind of reasoning, typically from Democrats and the left, when it comes to cigarette taxes. It goes like this: “This tax increase on [cigarettes, soda, whatever] will be a good thing because that tax revenue will help fund this really, really, really important government program. And, also, by raising the price of [smoking, drinking soda, whatever] it will discourage people from doing something that really just isn’t all that good for them.”
I hope you can clearly see the problems there. Cigarette taxes, and now soda/sugary drink taxes, are seemingly the one area of life where the left will acknowledge that what you tax you get less of. You tax cigarettes, you get less smoking. You tax soda, you get less consumption of soda. You tax income/work … you get less work? Of course. Except the left usually never makes that connection on that last one. Weird.
On the other side of the argument is the notion that said cigarette or soda tax revenue is going to help pay for some critical government program. Except that typically there won’t be enough revenue generated by the tax to actually fund the program, especially when you consider the diminishing returns on the tax revenue by the higher cost of consuming the drinks. The cigarette tax that was to fund the State Children’s Health Insurance Program, or S-CHIP, had one major problem: it needed about 22 million MORE smokers in order to fully fund the program. Oops.
That’s all assuming that this tax will actually be successful in driving people to other drinks. …
For the tax to have the effect Rep. Gabel desires, to drive people to drink something other than soda or other sugary drinks, it needs to be significant enough to make it costly enough for people to seek other alternatives. Will a penny per ounce do that? Unlikely. Adding extra $.12 to a can of soda or $.20 to a bottle, or $.32 or $.64 to fountain drinks isn’t likely to be enough of a cost burden to drive people to seek alternatives. There are a whole gaggle of people who regularly shell out $4 or $5 for a coffee or cappuccino at Starbucks. Do you really think that less than a dollar of extra cost is going to make that big of a difference? For most people, again, unlikely.
Which brings us to the last big problem: the problem of acceptable alternatives. Say the tax is effective in driving people to want to buy something other than soda or the other sugar-filled drink they like. It won’t be, but let’s say it does work. What alternatives exist out there? It seems clear that most people won’t be satiated with just water. Not everyone is going to want to drink coffee instead — into which people often put a significant amount of sugar. Nor does it seem likely people will flock to tea — iced tea often being sweetened, as well.
There just doesn’t seem to be a lot of alternatives out there for people to choose from if they don’t want to bear the cost of the tax on sugary drinks. So, they’re then still likely to just bite the bullet and buy the drink they want.
This tax just isn’t significant enough to have the discouraging effects that they proponents claim to want.
Which makes the real point of this gambit clear. It’s about revenue. It’s not about a concern for people’s health. And, why is it any of Rep. Gabel’s business what people want to drink any way? It’s a clear example of politicians feigning concern for your well-being in order to regulate the minutia of your life. And, finding new and exciting ways to separate you from your hard-earned money, to boot.
It was a terrible idea then. It’s a terrible idea now. And if Preckwinkle pursues it in this year’s budget, it’s nothing more than kicking the can of real, meaningful reform down the road even further for Cook County.
If you haven’t seen it yet, the Illinois Policy Institute has a new documentary film coming out on Illinois House Speaker Michael Madigan. The trailer:
The kicker: the website for the documentary is www.MichaelMadigan.com. Which begs the question, even if he famously eschews technology, how on earth did Madigan’s team not own that URL?
Capitol Fax‘s Rich Miller is in the film. But he’s claiming that he was “duped” into participating. From Miller’s Crain’s Chicago Business column:
I was duped by a right-wing organization into appearing in what will probably be a propaganda movie. It’s my own fault. The producer claimed that while some people were pointing fingers at House Speaker Michael Madigan, his company was interested in doing a fair and balanced film about “what’s really at the center of it all.”
Two days later, I found out that the forthcoming “documentary” is backed by an arm of the well-funded Illinois Policy Institute, one of Madigan’s fiercest critics and a staunch ally of Republican Gov. Bruce Rauner. The institute’s top executive is also a close Rauner adviser. I’m not exactly popular with that group, although I have strongly supported several of its small-business initiatives in Chicago. I’m not expecting to come out of the editing room looking too well.
Such is life.
I’m curious if Miller really thinks that the film will slice and dice what he said to make him look bad, ala the modus operandi of The Daily Show. Anyway, I can’t wait to see what he had to say if he’s openly fretting that he won’t “come out of the editing room looking too well.”
As for this controversy… look, I wasn’t there. But I’ll say this much: there’s a lot of pre-judging of a film that no one has seen yet going on here. It’s hardly uncommon for documentaries to have a distinct point of view. Take a look at some of the recent Oscar winners for Best Documentary:
- 2014: Citizenfour, which is a very sympathetic look at NSA whistleblower/leaker Edward Snowden.
- 2010: Inside Job, which contends that the 2008 financial meltdown was, well, an inside job perpetrated by the corrupt financial services industry.
- 2006: An Inconvenient Truth, a very one-sided and widely disputed take on global warming/climate change featuring Al Gore.
- 2002: Bowling for Columbine, Michael Moore’s anti-gun take on the Columbine school shooting.
And those are just some of the winners. Nominees with distinct points of view have included films like Super Size Me, Jesus Camp, Sicko, Food Inc., Gasland, and plenty of others that were never nominated. If “propaganda” is now being defined as a film having a point of view, then you’d have to say all of these films are propaganda. And it’s pretty hard to judge the Madigan film, since it hasn’t been released yet. Let’s cross that critical bridge when we come to it.
But something caught my attention in the comments on the first Capitol Fax post about this story. Here’s a supposedly anonymous comment:
And Miller’s response:
Sounds awful threatening. And so much for anonymous comments being anonymous, I guess.